Manufacturers’ Optimism Grows, but so Do Skill Gap Concerns

U.S.-based manufacturers are increasingly optimistic about the economy and the growth outlook for their companies, and that optimism is driving plans for increased hiring and capital spending, according to the latest results of PricewaterhouseCoopers’ latest Manufacturing Barometer quarterly survey.

However, manufacturers’ hiring plans may be threatened by what the same survey finds is a growing skills gap being experienced by U.S. manufacturers.

According to the PwC study, 60% of manufacturers expressed optimism about the current state of the U.S. economy, and 78% believe the U.S. economy grew in the third quarter, up six points from the prior quarter and the highest level since 2006.

Manufacturers also were optimistic about prospects for their own companies, with 82% expecting positive revenue growth over the next 12 months.

As a result, a rapidly-growing majority of U.S. manufacturers—58%--said they plan to add employees over the next year, up 16 points from second-quarter results. Only 3% said they plan to reduce the number of full-time workers on their payroll, and 39% said employment will remain unchanged.

But, even as they plan more hiring, manufacturers foresee difficulty finding the right candidates for the skilled labor, middle management, and production workers that they will need, according to the survey. Seventy-seven percent of respondents said they already need to fill skills gaps over the next 12-14 months, and only 23% said they have all the right skills needed at present. Half of all U.S. manufacturers reported they currently have open positions that they are unable to fill with the right skilled employees.

The PwC study suggests that U.S. manufacturers are becoming more concerned that skills shortages could retard growth opportunities in the near future, despite recent reports that the skills gap is overblown. A recent report by the Boston Consulting Group, for example, predicted that the near-term growth of the U.S. manufacturing sector will not be impeded by skills shortages. But, without more aggressive training and recruitment efforts, the BCG report warned, manufacturing skills shortages could impact growth by 2020.

What do you think? Is the much-discussed skills gap real? Do you share optimism about the U.S. manufacturing sector?